Daikin Industries to set up JV in India with Taiwan's Rechi Precision to manufacture compressors

New Delhi, Dec 17 (PTI) Daikin Industries, Osaka, a Japan-based global manufacturer of air conditioning and refrigeration systems, will set up a joint venture with Taiwan's Rechi Precision to manufacture compressors in India at Sri City, Andhra Pradesh.
     Daikin through its local subsidiary, Daikin Airconditioning India and Rechi Precision, announced setting up a JV to "manufacture, design and sale” rotary compressors for inverter & non-inverter ACs in India and some overseas markets, according to a joint statement.
     Though the company has not announced the investment, it said Daikin will be the majority partner in the JV.
     According to industry insiders, around Rs 1,000 crore will be invested in the JV in the next 5-6 years.
     "The joint venture is expected to become operational by the 4th quarter of FY24-25. The manufacturing facility shall be established at Sri City, Andhra Pradesh," it said.
     Established in 1989 in Taiwan, Rechi Precision is a global leader in the manufacturing of rotary compressors, motors and other components in the field of HVAC Business (heating, ventilation, air conditioning, and refrigeration).
     Daiking is among the leading players in the Indian HVAC market and had a revenue of around Rs 10,500 crore in the financial year ended on March 31, 2024.
     "This JV agreement leverages Daikin India's market leadership, industry expertise, sales network and robust technical support alongside Rechi Precision's proven rotary compressor technology & manufacturing prowess. Together, they will provide residential customers with cost-effective air-conditioners and support the high cooling demand," it said.
     This collaboration will also help to accelerate the shift towards AC adoption by the rising middle class, meeting both affordability and availability, it said.
     Daikin India Chairman & Managing Director KJ Jawa said this partnership marks a significant milestone in broadening its offerings, enabling it to deliver a wider array of advanced rotary compressor technologies tailored for the residential AC market.
     "As the market witnesses growing demand for cost-effective air conditioners, our extensive sales network, customer-centric approach, strong brand reputation, and reliable after-sales support - combined with Rechi Precision's innovative rotary compressor expertise - will empower us to provide economical and efficient air-conditioning options for our valued customers," he said.
     Daikin Industries Executive Officer, Global Operations Division Shoji Uehara said: "This JV formation is in line with our mid-term business strategy to establish a major hub in India. By partnering with Rechi Precision, a Taiwanese company known for its cost-effective material procurement and manufacturing expertise and extensive global track record in compressor sales, we aim to build a business foundation for compressor production and sales in India."
     This new company will produce and sell compressors domestically to alleviate supply shortages and cater to both Daikin's internal and external demand, he said.
     "As we expand our business, we will support the 'Make in India' policy as a leading air conditioning company and contribute to the sustainable growth of the Indian market through stable supply," Uehara said.
     Chen Shen Tien, Chairman of Sampo Corporation, the holding company of Rechi Precision, said he is excited to partner with Daikin for the India market and bring Rotary Compressor technology.
     "In this joint venture, Rechi Precision will bring technical know-how, R&D, continuous product development, production engineering capability etc and play a key role in setting up sales and service capability in India for Rotary Compressor Business," he said.
     Daikin, which is setting up its third manufacturing unit in India at Sri City, expects to manufacture 2 million units of residential units in India in the current fiscal and has plans to invest substantially to expand play further in the growing domestic market and also to scout for more export opportunity making India as a manufacturing hub.
     The company aims to manufacture 5 million units by 2030. Its 75-acre Sri City manufacturing unit is the largest factory in South East Asia.
     Earlier, Tata Group firm Voltas, which is a market leader in the Indian airconditioning market, tried to set up a joint venture with Highly International (Hong Kong) Ltd to manufacture compressors in India. However, in April 2023 it announced to terminate the agreement as it could not obtain necessary approvals from the government.
     The proposed JV of the Tata Group firm with Highly International was subject to clearance from the government under Press Note No 3(PN3).

(This story has not been edited by THE WEEK and is auto-generated from PTI)